COVID-19: What impact will the pandemic have on investment in low carbon infrastructure?

30 April 2020

Investment in low carbon infrastructure has paused in many markets and sub-sectors as the coronavirus pandemic disrupts the energy market and stakeholders take stock. Here you can listen to corporate energy partner Gareth Baker, Daniel Atzori from Cornwall Insight and Dan Wells from Foresight Group, discuss the impact COVID-19 is having, will have and what businesses and investors in this market can expect in the coming months.


Hello from Cornwall Insight and welcome to our first instalment of our Financing Net Zero podcast series. My name is Bertie and I am the key accountant leader here at Cornwall Insight.

Today's topic will be COVID-19's impact on financing low-carbon infrastructure.

Chairing the panel today is Cornwall Insight's Research Partner Daniel Atzori and our guests are Gareth Baker from Gowling WLG and Dan Wells from Foresight.

Gareth leads Gowling WLG's corporate and M&A offering in the power and renewable sector, he has extensive project development, sale and buy side MNA, investment, corporate and finance expertise in the sector. He has advised developers, sponsors and funders on acquisitions, disposals and financings across a wide range of generation technologies.

Dan, a partner at Foresight is responsible for leading Foresight's existing retail solar funds as well as deploying Foresight's energy infrastructure strategy more widely. He has over 18 years of experience at finance and investment in renewable energy and sustainability driven themes. He has worked in the sector at different times in Europe, North America and Asia. After the podcast there will be further details on how to contact us if you have any further questions on this subject and how Cornwall Insight can help you and your future investment and development plans.

Daniel Atzori: Thanks a lot Dan and Gareth for being here. So of course we expect the current Coronavirus crisis to have an impact on investment in low-carbon infrastructure. In terms of the impact over the next three years what do we expect to be the most notable disruptions? So the first one that comes to mind of course is the delay on projects and on government auctions so Gareth, what do you expect?

Gareth: Thank you Daniel, so in terms of new projects or projects which are in development or construction, delay is I believe, inevitable. We have as some of our clients, DNOs and they are already saying that they have moved towards focussing on only critical infrastructure which is the kind of infrastructure that supports COVID-19 key workers which means that new connections are not high on their priority list right now and upgrades are not happening either and we are particularly seeing that have an impact on energy from waste on-shore wind subsidy free and also subsidy free solar projects where people are perhaps foraying into the early construction stages. You asked the question about government auctions but I think on CFDs certainly there is a consultation going on right now about which technologies will participate in which pots and whether they will be open to those pots. My observation would be given that the huge amount of funding that is needed to go into other areas, I wonder whether regardless of access, whether we are going to see some constraints on the size of those pots which therefore it will have impact on new deployment of new subsidy free assets particularly in wind and solar.

Daniel: Thank you Gareth. Dan, what do you expect on this this side, so on the impact on projects and possibly slowing down government auctions?

Dan: Yes, so I think picking up on some of Gareth's comments there. I would also agree that clearly in the short run over the course of this year and may be trickling over into next year we are going to see some delays to the project pipeline, really for kind of those two principle reasons. So first of all is reasons related to the lockdown itself as Gareth has mentioned a kind of focus on critical only activities for grid operators in many jurisdictions. Lockdown also potentially induces some financing issues and we might talk about bank financing in due course but there are kind of specific areas so in the US for example which is a market dependent upon continued tax equity, if we see a tightening of tax equity availability in the US because of constrained bank and corporate balance sheets obviously that does make it likely that there will be some delays in project over the course of the next year. And obviously the second bucket of issues is supply chain issues – just getting kit ordered and getting projects built given that the very international nature of kind of everything these days and that includes building renewable energy projects. I would say as an investor in greenfield projects we would obviously just advocate that investors are just very careful in terms of looking at construction timelines for projects that are already underway or that they are evaluating right now. It is something certainly that we have been doing recently and it is the time when you really need to think about your investment discipline and making sure you have suitable contractual protections and financial protections and I have to say actually certainly from our perspective it has been pleasing to see that, I guess, all of the kind of discipline that we apply as investors is now kind of reaping its benefits in terms of the fact that actually even with some relatively substantial delays to projects, certainly from our perspective our financials are relatively well protected just because of what we put in place there.

I think in terms of auctions. There is clearly, this situation creates challenges for a number of reasons, not least just because simply people's attention and government's attention is kind of elsewhere. I would potentially strike a slightly more optimistic note though in terms of auctions going forward and this might be something we touch on a bit more in other questions. But really I guess from an investment standpoint what investors want, what the private sector wants is not so much subsidies, we don't need financial underpinning of assets, we need more certainty around some level of kind of fixing pricing and investors are actually, to some degree, prepared to pay for this and so we can see this in the CFD pricing in the UK which is essentially implying that the private sector is paying the government back. We are paying more than the government is putting in because we will take lower pricing than spot pricing as long as there is a level of fixing to it and that is a bit like investors being happy with negative rates on government bonds because they are paying for that kind of certainty.

So why does that make things look more optimistic? Because it means that it is less of a drain on the government balance sheet. In fact, potentially quite the opposite as we look into the future. So hopefully that means that we will continue to see auctions of CFD like mechanisms going forward.

Daniel: Brilliant and on the micro‑economic and financial side there are expectations of higher costs of capital as well as lower availability of debt. So Dan would you agree with these findings?

Dan: Yes, I think my answer is partly and may be not really. So, yes, we are have certainly noticed in the short run some tightening of credit in terms of both terms and availability. Some credit providers temporarily stepping away from the market and that is normal during a period of intense disruption. However, going forward there will be plenty of liquidity generally in the market. We would be looking at the size of the stimulus packages and the amount of finance that is being forced through the whole system dwarfing even what we saw in the global financial crisis. So there is plenty of liquidity there. I think we will just see lenders just looking more carefully at the nature of assets and their risk profile both in terms of providing finance and setting terms and obviously what we have seen recently is infrastructure which is clearly an asset class that is eminently suitable for investing in kind of tougher times. Within infrastructure there are assets with very different kind of risk characteristics particularly in respect of how they perform in these kind of periods. So I think it is probably more about providers of finance being may be a little bit more of kind of discerning on pricing when they are looking at the asset class going forward.

Daniel: And Gareth do you think that it is going to lead the market and investors in particular to refocus on assets and factors they understand the better just because they are proven and operational. So kind of steering away from more novelty and emerging technologies:

Gareth: I think that is an interesting question. I think if you look at renewables as a whole I would argue the case that it is something of a safe haven anyway where you have got a long term asset with fixed returns, certainly where it's got a subsidy, and if it hasn't a good credit rating and it is an essential service as well. I accept the volatility around merchant power prices and that might be something which we will come on to a little later in this recording but I think the message is that we are seeing coming out of people who invest, there are asset classes which were perhaps core plus plus that look a little bit more core now, e.g. fibre and broadband, and there are those where they are seeing immediate hits and are more concerned and things like airports and transportation being the ones that are suffering. But I think if you look back into energy my overarching I guess comment would be that there are some sub-asset classes where perhaps it has been harder to attract capital, by which I mean equity such as battery storage or some battery storage projects or other storage projects and my perception is based on the clients we are talking to, those projects have paused and some of those interested parties have fallen away. Whereas those which are tried and tested are possibly going to be as popular as they have ever been because there is still an underlying need to deploy the liquidity that Dan alluded to in his prior response.

Daniel: Thank you and of course we are seeing as a consequence of the crisis we are seeing corporate balance sheets increasingly under pressure. Does this environment that we are now entering, that we are now living in, provide enough incentives for corporates to de-carbonise? I am thinking of course of corporate PPAs as an example of this. Or on the other hand of course there will be a little bit more caution, sort of more approach and people will be on the fence at the moment. So Dan what do you think in this respect?

Dan: It is a funny one because on the one hand we are going through an absolutely horrendous time for, in particular, small and medium sized businesses and really an unprecedented period, how things are going to look in terms of coming out of it. On the other hand though, in terms of what is driving corporate renewable procurement, you look at the main drivers of this and there has been a particular uptake in the last few months, some of the announcements coming out in particular the Microsoft announcement in terms of essentially achieving net zero emissions since the point the company was founded. It is hard to see and it seems unlikely there is going to be much a re-trenchment from that. These are very large, very well capitalised businesses that in fact in many cases are well positioned to not only survive but actually flourish in circumstances like this. Amazon obviously being another good example here. So those particular groups and particularly the tech firms who are driving corporate renewable energy procurement, they have made very big, very bold public statements that they are very unlikely to roll back from, those budgets are set aside. So I can't really see a weakening of balance sheets in that respect causing a kind of big disruption to corporate renewal procurement, add in the fact that in many cases now renewable energy is the most cost effective solution for corporates anyway so it is not like people were paying a big green premium which they will no longer be able to pay. So in that respect I am relatively optimistic.

Daniel: And Gareth how would you assess the market sentiment in this respect? Do you see kind of long term drivers still being there or do you expect more of a wait and see approach, at least in the short term for people just waiting and see how the situation evolves before committing:

Gareth: Yes, well, I think I would separate the market into different segments. I would agree with Dan's comments particularly where you have I think two characteristics going on from the nature of the organisations that Dan mentioned. So first of all they are entering the market as part of a much broader ESG strategy which in tougher times they will be tested on as to whether they hold good and I agree that given the long term brand focussed messages they have given the market I would imagine they are unlikely to row back from that. Of course these organisations as well that we are talking about are substantial, have extremely good credit ratings and therefore are in an esteemed view of being able to sustain and have the characteristics of being there to support a long term contract that a generator would want to be signed up to. I think the struggles that we have seen tend to be in a different segment of the market where you still have the issue of do organisations want to sign up for very long term commitments, perhaps in areas which are not their expertise and it is very hard within those organisations to get to the right individual. There aren't energy purchasing managers. You inevitably probably end up dealing with the FD or the CFO and anything beyond five years is very difficult to do which is why the market was needing to adjust to that. So I think at the moment we are going to see a pause at that point. Not specifically because it is an energy sector issue but rather because organisations are keeping their cash because they need to understand where we are going with the broader micro-economic environment.

Daniel: And moving to the factors that could be mostly impacted by the crisis. Of course what concerns onshore wind, for example, until a few weeks ago there was a lot of optimism especially for the sector to kind of restart in the UK. But broadly speaking what factors do you think are going to be most important? So are just the factors that were already perceived as too risky until just a few weeks ago or are we seeing a sort of like fundamental overhaul like reshaping of the concept of risk across established and emerging sectors.

Dan: So I guess the way I would answer that would be that the reshaping of perception of risk is not to sort of say OK well let's look at the more kind of risky assets from a sort of basic risk and return standpoint in terms of how volatile their income streams are for example and then to say yes they are just now either more risky. I think what it is, it is a qualitative assessment of risk in the sense of you are looking for the kind of good attributes and the less good attributes in time like this. So the good attributes being resiliency and assets which will just keep on producing come what may and are still relatively easy to build and put together versus assets that are exposed to more regulatory hurdles for example in terms of building them just where you need more of a consensus of regulators, governments, whatever before your asset can actually be built and so sort of taking that framework for thinking, assets like wind and solar they clearly have great resilience characteristics as we have touched on. Once they are operational they require very limited human intervention to keep them going, they don't require a food stock. Even in temporary periods of lower pricing because they have a low marginal cost of production they can still make money. Going to the other end of the spectrum so offshore transmission cables interconnection we will have a clear need to make Europe, for example, more interconnected, that hasn't gone away, but those kind of bigger projects which are more dependent upon regulators with more kind of regulatory points of delay, while there is more risk around those in terms of getting them financed it is likely they will be delayed. Taking may be the kind of third bucket of assets, so more related to their kind of flexibility assets so those that typically are perceived as having a somewhat higher kind of risk return profile. It is not like the underlying risk profile of those assets has changed. It might be harder to get bank financing in the very short term for them simply because banks have got other things to think about other than how they adapt their kind of credit metrics to incorporate, say, batteries. But really the bottle neck for batteries, for example, in terms of their deployment is just having the right kind of regulatory frameworks for them to monetise revenue and that is something that more sits with the regulators. So Ofgem in the UK or it might be kind of what's happening in the US and actually FIRK the regulator there is really kind of pushing for better frameworks for batteries. So I don't really see that being impacted by COVID. The lead times kind of are what they are and we would hope to see more of those assets coming to market, may be not so much this year but certainly moving into next year and beyond.

Daniel: Thank you. Gareth what are your thoughts about the kind of terror key of risk across different factors both more established and a bit less mature?

Gareth: Well I concur with Dan's comments actually. The point about political bandwidth to do things and getting the attention of those that you need, whether that's regulators or otherwise, is going to be incredibly difficult in the short term, certainly the medium term as well. We should think internationally but of course in the UK if you think about how much political time was going to be devoted to Brexit and that has been pushed firmly down the agenda, getting the air time to do other things is going to be extremely difficult. So I think that that regulatory risk from my perspective has gone up and therefore damaged the chances or at least delayed the chances of some of the technologies that are more well established like offshore wind, onshore wind and solar and frankly, we are not seeing a reduction in the appetite to plough forward with those more established technologies in the subsidiary free era. Accepting there will be delays and accepting there will now be some unhelpful power price moments happening right now that will feed into curves and damage the underlying values that they might wish to achieve at the relevant stage that they exit those projects. But the activity is still going on and we think it will continue. Things like nuclear, for example, I think were very difficult and there has been conversations going on about regulatory asset based models. I just really struggle to see where people will get the attention of governments and regulators in the short term on those kinds of topics.

Daniel: For example, hydrogen and carbon capture utilisation and storage (CCUS) seem to be quite crucial for the UK to reach net zero. For example, according to National Grid future energy scenarios and even in the spring budget we are seeing some update on CCUS and recharging the infrastructure. So what is your assessment, Gareth, in light of the more recent developments? Do you think we are going to see some emphasis on these factors or they are now simply too risky and we will go back to what the market knows better?

Gareth: Yes, I am at risk of sounding overly negative here so Dan might have a bit more of an upbeat message than the one I am about to give. But I do think, and this is where I come back to power prices, I think that the significant drop in the whole sale price through the immediate drop off of commercial industrial power demand is happening now and is going to be in financial models for some time to come and we are also may be going to see the emergence of a new line in those models that looks something like pandemic risk and I believe that that factor is going to be very difficult in terms of getting investor appetite and getting bank appetite. So I am of the view that those established technologies are going to continue and there is going to be appetite to invest and fund them and whilst these other technologies are needed I feel certainly in the short to medium term a more difficult investment environment in any event has got slightly more difficult.

Daniel: And Dan what would you say about the investment case for even charging infrastructure so the carbonised transport as well as hydrogen and CCUS? Should technologies that are crucial for de‑carbonising heat but for hydrogen transport as well. So do you think we are going to see a focus or they are going to be amongst the casualties of the crisis, again at least in the short term?

Dan: Yes, so I am going to agree with what Gareth said in many ways and I am going to be optimistic at the same time if that is possible. So I will try and explain that. So first of all a couple of specific points. We are obviously very focused on the drop in wholesale power prices at the minute which is pronounced. It is masking more complex stuff that is going on underneath at the same time we are seeing this drop off in commercial and industrial power usage, there is a big increase in residential power usage. But it is natural that when you shut down huge sections of the economy you will have a knock on effect on power pricing. But as humans we always tend to often kind of maybe focus too much on the immediate and short term things that are going and then extrapolate those into the future. The economy will start to re-open and we will see power prices starting to bounce back. Exactly when and how and in what kind of timeframe is still relatively unclear but the fundamental value of these assets is not really determined by the short term fluctuations it is long term power pricing which is underpinned by its structural issues such as how we are decarbonising in the long run, retirement of fossil fuel plant etc. So I think that is kind of important to bear in mind and the world will probably look very different in 12 months' time. When we are thinking about net zero, yes, we need to be getting on with things very, very quickly and we are behind the curve in the UK and we are behind the curve globally in terms of reaching anything close to sort of piratically agreement type de-carbonisation terms. However, setting that aside there is a natural sequence of things and a timeframe and that's important. So I always say that CCS and hydrogen are both potentially important components in the long term of de-carbonisation and we certainly are not in a position to take anything off the table. The economics of CCS, like that of nuclear, seem at the minute very questionable and we don't know whether they will have a material role to play in the long term but it is right to continue to consider them as options. However, those two technologies and for hydrogen, we don't need to be financing them right now and the reason for that is that the economics of wind and solar coupled with cost declines and lithium lined batteries mean that we are continuing to decarbonise and we will continue to decarbonise certainly over the next decade without really needing necessarily to lean on those technologies. One of the great lessons of the last five years has been that energy systems can cope with much higher rates of de‑carbonisation and higher rates of renewable penetration than we really thought was previously possible simply by having a more flexible system.

So we don't need to get into hydrogen quite yet. Hydrogen wasn't going to become a financeable technology at scale next year even without COVID. Yes this may delay things a little bit but this is not a 2020/2021 question. This is a little bit further down the line. So in that respect and certainly from a decarbonisation perspective and from a financing perspective I would say there is a more positive outlook here which is there is plenty of stuff to finance and assets that will be resilient even in pandemic situations and I think Gareth made a great comment there about investors should factor in pandemic risk. Yes, and I would put that with a bunch of other things. There will always be uncertainties when you are making long term investments and it is all about understanding the kind of scenarios that might play out and what does your asset portfolio look like in those situations.

Electric vehicles are to finish on that Dan. I think here in terms of charging. Rather than focusing on charging points let's focus on the big picture which is what is the future of electric vehicles and obviously the kind of charging system falls out of that. I think certainly pre-COVID it really looked and felt like the train had left the station. The automotive industry has basically made its bet on the electric vehicle kind of world and is moving away from combustible engines. Does COVID change that? It is pretty clear that the big automotive manufacturers are haemorrhaging cash right now. The US is probably a bit of a worry as well in respect that sales of EVs were already flat down last year for a number of reasons so is this really putting the breaks on the industry there. Now I would argue not actually. If we look globally the automotive industry, in particular groups like VW, have made huge bets on electric vehicles and I don't see that changing. There is really clear compelling evidence of just why EVs make sense in the world even setting aside their decarbonisation benefits. Our reference here actually, there was a report that carbon tracker did last year that essentially showed that EVs powered by wind and solar can deliver six or seven times as much mobility as a gas and in-powered car for every unit of energy and that is just because of the inherent efficiencies of the system. So I can't see that changing. Electric vehicle charging spending as a proportion of government spending is very, very small so I would say like, it is the kind of thing where it is good to have more spending to keep things ticking along from a RND standpoint. In the not too distant future, yes, we will need to upgrade the charging system as we reach bottlenecks in the future as we see mass adoption in urban areas where people don't have off-street parking and their own access to charging. Yes, that will need to be sorted but again, big picture, I see this more a short term issue than a structural issue.

Daniel: Brilliant yes, so do we think also banks are going to take this long term view or are they going to be slightly more conservative again in trying in to low risk factors? Gareth and then Dan.

Gareth: Yes, I will make a quick comment on the funding community. So first of all there are a number of banks who are have funded projects that remain under construction and therefore they are in live situations that they are needing to assess. The feedback we are getting is that whilst people always might offline explore their contractual rights there is at the moment at least a real will to try and support projects and not make rash decisions and that is because these are long term contracts or long assets and because the banks are being eminently sensible about it. So I think those live situations that is where we are. Might things change? I guess that depends on how long things continue. In terms of appetite for different types of asset. I mean, before this happened the feedback that we had seen is that there was still some incredibly good value debt terms out there and where there is any given project that fitted squarely into the lower risk category then there was a lot of appetite. The funders that I have been talking to are trying to find ways of investing into other asset classes. They have capital they need to deploy and there will not be the volume of projects out there in the perceived safer areas to enable them to deploy that capital. So whether it is a traditional generation flexibility services or a combination thereof they were trying to find ways of funding and I do think that they will come back and that they will try to do that in the future too.

Dan: Yes just to add to that. I think since 2008 the banks are in a materially different position now. The structural weakness and the kind of house of cards element we saw back in the global financial crisis. We don't have that any more. There has been a lot of focus in the last decade or so about improving the balance sheets of banks and their underlying strength so I think things are in a much better position from that perspective. It is more just as we touched on earlier, clearly from an underwriting perspective banks and any financier just needs to be cognisant of when the world economy just looks very different and to try and plan around that and to stress test your portfolio for how it looks when you get these shutdown events.

Daniel: And moving to the contract for CFD. Do we think that disruptions from COVID are going to impact project timing and delivery with broader risks for all of the schemes such as the CFD?

Gareth: Well I will just make one quick comment in this area which is that actually Ofgem and the CFD counterparty has already come out and accepted that COVID-19 is a force majeure for the purposes of the CFDs so that gives comfort to developers in this area and, again, I think it is just a sensible view having regard to the fact that a short term issue, that we all hope it to be, should not damage the long term prospects of those projects that have been awarded with a CFD and are currently in the construction phase.

Daniel: So Dan would you agree with this view or do you think we are going to see a push back on the delivery of the capacity and a slowing down of the introduction of renewable carbon assets in the UK?

Dan: So I think there are two issues then. There is what is happening to the supply chain and what is going to be the response of essentially the government in this respect.

In terms of the actual supply chain disruption China is already back at work. Certainly in terms of our asset portfolio on the green field side we are not seeing delays in equipment there. Hopefully Europe will be coming back to work fairly quickly as well. So it feels like those supply chain issues themselves are relatively manageable and it seems like a relatively pragmatic approach has been taken both in the UK and elsewhere so we are seeing other regulators across Europe put in place kind of flexibility to work around any COVID related delays, pushing back CFD deadlines for example and I guess the only thing we would stress is that all investors should just be carefully looking at the force majeure components of their contracts just to understand exactly where they will stand in terms of risk because obviously there is a big spotlight being shone on those right now.

Daniel: And we already spoke about how electricity prices could potentially reduce the attractiveness of subsidy free. So Gareth what would you think? Are we going to see some substantial impact in this respect?

Gareth: Well I have made the negative point about the impact of power prices both now and how that looks on a forward model. I would like to make a couple of more positive observations about new project development and cost and I think I would make a couple of comments here which is particularly informed by the subsidy free work we have been doing and seeing how the supply chain has been responding to the need to help subsidy free get going by looking at their own pricing. Certainly some of the turbine supply work we have been involve with recently. I continue to be amazed at how quickly the supply chain responds to that challenge and therefore continues to find savings and we are seeing that trend continuing into the subsidy free era, such as the pricing now compared to how it was even two or three years ago is just so, so competitive which is great. Another area I think for positivity is around O&M. The O&M costs have always been a crucial thing to think about on the life of the project and the O&M providers had already started making great strides towards things like more well thought through preventative maintenance through predictive analytics virtual assessment and so on. I.e. doing things on the desktop that limited the need to go out to the field and made for more efficient operating of the assets on the long term basis and there is a real opportunity right now to accelerate that work and frankly therefore further reduce the O&M costs over the life time of the project. In the very short term I think people will be assuming a greater chance of failure or a longer term need for shut down when we are all back at work. But once we are through that I think there will be greater cost savings and those construction and O&M cost savings will be something that are both really good news for the sector.

Daniel: And Dan moving to M&A do you think that buyers of assets are going to take advantage of bargains during the crisis like, for example, what we witnessed after the 2008 financial crisis. For example, in countries like Spain and Italy. Do you think there would be some wave of M&A project at some point just because of distressed assets coming to market?

Dan: Yes, I think that is possible to a degree for sure. I think it is also possible because we may see developers of assets just needing liquidity at a certain point and therefore essentially wanting to instigate sales. Obviously in the very short term what we are seeing is that sales processes that have already started are continuing and completing. We are completing deals, we completed a large deal this week in fact. It might be we see a temporary mini-hiatus just in terms of people thinking that right now is not the right time to launch a process if you have some level of flexibility in the time frame and because there may well be delays or flexibility in things like CFD frameworks in certain jurisdictions. It might be that people have flexibility a bit. But yes in these situations there will always be price dislocations that investors can potentially take advantage of and particularly where you have investors that are able to take more of a long term view and to, we would say, frame the value of assets with that longer term perspective of what is driving them which is the long term structural issues of the energy and the economic situation rather than the really short term pain. I guess we would also speculate there might be more of an emphasis given just the increasing importance of resilience, there might be more of an emphasis around maybe more local generation systems, community based energy systems. Anything that helps support self sufficiency has got to be valued pretty highly going forward. So, yes, there are opportunities for bargains for sure but really it is about looking for the right types of assets if investors want to take a long term view.

Daniel: Brilliant and last but not least I would like to have some quick thoughts from you on how important you think sustainability and economisation need to be for economic stimulus packages that we are going to see and are already seeing during and after the crisis?

Gareth: Yes, again, wanting to kind of conclude on a more positive note. This is a crisis time but it also brings opportunity. I think Dan alluded to the fact earlier in this session that we are seeing the highest penetration of renewables on the system that we have ever seen and the system is coping with that which hopefully supports the idea that we can see even more. So I am optimistic that there is an opportunity to be grasped here and the government had already seen that opportunity in terms of offshore wind and viewing it as an industrial strategy or a matter of industrial strategy. I am hopeful that sense prevails around onshore wind as well and let's see if we can all grasp that and I hope that we can. We will need to invest our way out of this situation and this is an asset class that is strategic and can be a really good part, I think, of that story.

Daniel: Thank you Gareth and Dan?

Dan: Yes, I would really strongly agree with those comments from Gareth. Infrastructure is traditionally part of stimulus packages in these situations. It has been for a very long time. In the short term there may be and there is a discussion of a trade off between simply resuscitating the economy and getting it back on its legs and also green objectives. I think we would say that that discussion should and hopefully will rapidly evaporate and that is because there is a clear fundamental difference now versus previous crisis's in that there is no longer a trade off between economic development and green development. Renewable energy stands on its own two feet. It doesn't require subsidies and in fact is the most economically efficient way of growing. So that is a fantastic and positive point. I think governments will and already do recognise that and for evidence look at the announcements we have seen coming out of Scotland, today in fact, around how the future may look there, the language around creating a fair and more sustainable society. We have already seen that in terms of messaging around stimulus packages in South Korea, in New York, in Germany, green finance being very much at the heart of it. So it makes eminent sense for that to be the case. We would hope it is the case. I would maybe conclude by saying that the renewable energy financing community should use this opportunity to make its voice heard. Our voice does need to be heard to communicate that message. Otherwise there is a risk it might get lost in the general noise of things.

Daniel: Brilliant. Thank you very much.

As we have heard today investment in low carbon infrastructure is of a long term nature. So despite the current crisis and its impact on the energy market, the drivers behind the need for renewable generation and for flexibility are not going to be fundamentally impacted once the slow down is over. Hence mobilising private capital to reach our net zero goals will be more important than ever.

I would like to thank our guests today, Gareth Baker and Dan Wells, for joining us and sharing their valuable knowledge in the sector as well as you for listening in.

If you would like further information regarding Cornwall Insight and our services please feel free to contact myself, Bertie, or Daniel at We also have a specialist Financing Net Zero Linked-In group where we will be sharing future updates on this series as well as others we will be hosting.

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